The news surprised many investors: The combination of two U.S. manufacturers with such iconic consumer brands has been a high-profile case for the Justice Department's antitrust division and something of a litmus test of how aggressively recently installed division chief Thomas Barnett intends to enforce regulations to prevent mergers that hurt competition.

Some observers predicted there was at least a 50 percent chance the department would either step in and seek to bar the merger, or force the companies to sell certain assets.

The merger, which Whirlpool said Wednesday it plans to consummate "no later than April 3," has been politically controversial since it was announced in August.

Opponents of the deal loudly criticized the proposed combination as anti-competitive, contending consumers will be hurt because the merged company will enjoy such a dominant share of the U.S. market for washers and dryers.

A combined Maytag/Whirlpool "could successfully use their enhanced market power" to squeeze merchants for more floor space, or to shut out startup competitors, argued the non-profit American Antitrust Institute.

But Whirlpool argued that the U.S. market is being transformed by globalization. A growing influx of new, low-cost competitors from China and Korea is steadily making the U.S. appliance marketplace more competitive, and benefiting consumers by pulling prices lower, Whirlpool contended.

Maytag, it noted, has been steadily losing market share--and economic viability--because the Iowa company lacks the size to compete in the increasingly turbulent market.

Late Wednesday, Whirlpool Chairman and Chief Executive Jeff Fettig said the Benton Harbor, Mich.-based company is "pleased" with the Justice Department ruling, which experts think will allow Whirlpool to save hundreds of millions of dollars through efficiencies.

It will also, however, deal a heavy blow to the economy of Newton, Iowa, where Maytag employs an estimated 1,300 workers at its corporate headquarters.

While Whirlpool hasn't said what it intends to do with any of Maytag's operations, the Michigan company is expected to consolidate administrative functions in Benton Harbor, eliminating many, if not all, of the jobs at Maytag headquarters.

Maytag, which is smaller than competitors like Whirlpool or General Electric, has struggled off and on for years, in part because it has been slower than its rivals to shift production to lower-cost countries in Mexico and Asia.

But its problems came into sharp focus in early 2005, when losses widened and Maytag shares tumbled. In May, the company agreed to a $14-a-share buyout bid from an investing group. Subsequently, however, Whirlpool stepped in with a $17-a-share bid for Maytag, which it later raised to $18. Maytag remained reluctant, in part because it was worried that the deal might never get government clearance, leaving the Iowa company with no deal months later.

Whirlpool finally claimed Maytag with an offer of about $21 a share in stock and cash--and an unusual promise to pay Maytag a $120 million fee had the deal been derailed.

In announcing the decision, the Justice Department pointed to the growing importance of relatively new players in the U.S. appliance market, including Asia-based LG and Samsung. As a result, it said, "any attempt (by a merged Whirlpool/Maytag) to raise prices likely would be unsuccessful."

The Justice Department also noted that appliances are increasingly sold through a handful of "big-box" retailers such as Lowe's, Home Depot and Best Buy, buyers with enough purchasing muscle to withstand a vendor's efforts to boost prices.

The ruling, announced late in Wednesday's trading session, drove both companies' shares sharply higher in New York Stock Exchange trading. Maytag shares jumped $4.73, or 28 percent, to close at $21.81; Whirlpool shares climbed $6.38, or 7.1 percent, to close at $95.95.

As part of the August agreement, Whirlpool also agreed to assume a hefty $977 million in Maytag debt.